Doing Business in China: Why Transplanted Managers Fail

The story is a fairly common one. A company decides it wants to do business in China. It does the required market research, makes the necessary preparation, and then chooses one of its best managers to go and lead the team. To sweeten the deal, full relocation packages are offered with huge perks like free housing and international school for the kids. Yet, more often than not, regardless of how the business is doing in China, these managers quit or demand to move home. Why the high failure rate?

Doing Business in China: stay or leave?

Life in China

Doing Business in China: Why Transplanted Managers Fail

Life in China is very different from life in the US. Sure, many highly paid managers on an expat package probably live in one of the extremely nice, almost Americanized communities in an international city. But these areas are small and can feel isolating. The second you step outside them, you are in China proper and face to face with all the differences you can’t really understand until you’re actually there.

Life can seem loud and chaotic in China. There are a lot of people and everywhere is busy, all the time. Americans who are used to living in their homes and cars and barely even seeing neighbors can find this very frustrating to deal with.

The pollution in major cities is awful and future health is a major concern. Companies in Beijing have been struggling to retain and attract talent for years now. The pictures on the news are awful and, living there, it’s even worse. Other major cities like Shanghai, Shenzhen, and Guangzhou aren’t faring that well either. You may only see the sun 2 weeks out of the entire year, the rest of the time the sky is covered in smog.

Medical care can also be a major factor. Even in topnotch international hospitals, doctors may still be stronger supporters of traditional Chinese medicine (TCM) than Western medicine. A common question for any kind of illness may be, “Did you have the air conditioner on?” as cold air is believed to cause all kinds of sickness. You may have a torn ligament that needs surgery and the doctor recommends you stop eating a particular kind of bean. For a Westerner with a health issue or facing a major medical procedure, this does not inspire trust, regardless of how well insurance covers it.

The bottom-line is that, in addition to doing business, life in China, or any new country, can be frustrating and scary if they haven’t lived abroad in a developing nation before.

Business in China

Dealing with employees who refuse to take responsibility, managers who are gaming the system or giving special treatment to friends, government officials asking for bribes and then making life difficult for the business when not given, these are all challenges faced while doing business in China that may not be faced back home.

Yet, the home office often rarely understands these struggles. The intense pressure to achieve results may put the new manager in a position where they feel like they are forced to compromise on their values or they are putting in long hours and coming home stressed every day to try and achieve results. This is on top of all the added pressure and stress of moving to a foreign country and culture.

The Trailing Spouse

Spouses and children can be just as big a factor in a manager’s decision to leave as anything to do with everyday life or business in China. Many spouses often quit their jobs with little opportunity to also find work or continue their own business in China. Being forced to stay home and take on a role they don’t remember going to college for can cause resentment and a huge amount of stress in the relationship.

The spouse, who is probably home all the time, must also deal with the stresses of adjusting to life in a new country, but much more consistently than their partner who is at work all day. It can be isolating and lonely.

Children also may not like moving to another country and the trailing spouse will hear about it from them, which will then add to the general level of stress in the household.

Making the Necessary Preparations

There is actually a lot of periphery support that needs to go into transplanting a manager from the US to doing business in China, far above and beyond that offered by typical compensation and benefits packages. What kind of support will the wife and children also have on hand? Is there a community the company works with that they will be able to integrate into? How much time will you give the manager to adjust to life in China and start to understand the business before putting on heavy pressure to achieve success? Have they been given sufficient initial and ongoing training in terms of cross cultural communication and understanding?

Having a stable leader that you can trust may be a deciding factor in whether or not your venture into doing business in China actually succeeds. Take the time to understand the factors above and find answers to the questions before sending them over. They’ll thank you for it and your business is much more likely to succeed without frequent changes in leadership.

Casey W. Xiao-Morris is a veteran China Business Consultant at Leverage China, LLC., helping her clients succeed in China’s market. Casey can be reached at cxmorris@LeverageChina.com.